February 3, 2010

Now What? Part 2

Episcopalians cannot but be pleased with Friday’s court order requiring that control of substantial assets be transferred from the control of Archbishop Robert Duncan and his minions to the Episcopal Diocese of Pittsburgh. The sudden acquisition of these assets, however, probably valued at $25 million or more, comes with their own set of challenges and obligations. I don’t know if the diocese has been preparing to deal with the day that is fast approaching, but, whether it has been or not, some independent reflection of what needs to happen next may be helpful.

Real Estate

No doubt, people on both sides of the Pittsburgh divide were surprised at how much real property is owned by the Board of Trustees. Some items on the special master’s list that is Schedule C are of minor significance. The governing board of Sheldon Calvary Camp, an institution that traces its beginning to Calvary Episcopal Church, has always been loyal to The Episcopal Church, and it will pursue its mission as it always has. Of course, there are some oddities on the list. I had no idea that the diocese would be re-acquiring two cemeteries, and I must admit that I know nothing about them and nothing about what it means to own them. They may be significant assets; they may be significant liabilities.

Church properties—there are more than 30 of them—are another matter. Some of these properties already have Episcopal congregations (St. Brendan’s, Franklin Park, for example), and the court order is of little consequence for them. At least one (Emmanuel, North Side) has participated to a degree in both dioceses. That title to its building is now vested in the Episcopal diocese may make it easier for the congregation to decide where its allegiance should be.

Many churches now owned by the Episcopal Diocese of Pittsburgh are housing non-Episcopal congregations. What is to be done with them?

The diocese has several fiduciary responsibilities. First, it needs assurance that the buildings are adequately insured and that any mortgages are being paid. Loans payable to the diocese (detailed on Schedule B of the special master’s report) also need to be paid. Because the properties have not been subject to diocesan oversight for some 15 months, physical inspection is probably in order. Diocesan canons require diocesan approval for projects that modify buildings substantially, so the diocese should be aware of construction projects accomplished, in progress, or anticipated.

What of compensation by non-Episcopal congregations for future (and perhaps even past) occupancy? The Episcopal Diocese of Pittsburgh does not exist to provide churches for non-Episcopal denominations. Renting or leasing is an obvious possibility here. Requiring no compensation would constitute fiduciary malfeasance.

Renting church buildings occupied by non-Episcopal congregations is bound to be controversial. Some will see requiring rent as uncharitable; others will see allowing “Anglicans” to use the buildings at all as unacceptable. Two issues must be kept in mind, however:

Judge James has declared that building occupants cannot be evicted without permission of the court nor property sold without such permission.

The diocese is not prepared immediately to assume the maintenance of 25 or more empty churches.

As for the restriction on eviction of breakaway congregations, no one knows what it would take for the judge to give his permission to remove a congregation (or to sell a building). I am told that Judge James has expressed concern for people who might be deprived of their worship space, but this is the situation in which many Episcopalians have found themselves. Moreover, the reluctance of Judge James to evict interlopers seems to be a personal concern, rather than one rooted in law. In any case, if only for the sake of the buildings in wintertime, it is best not to empty “our” churches all at once—certainly if no Episcopal congregation is prepared to occupy them immediately. Requiring rent has the dual advantage of replacing lost assessment income to the diocese and, if the rent cannot or will not be paid, giving the judge a reason to allow eviction.

The diocese will have to decide how to set a fair rent. In most cases, I suspect that it will be difficult to identify comparable properties that could suggest a fair monthly rental. The diocese could, of course, base rent on the assessment that would be required of an Episcopal parish, but this would be substantially blow the market rate for rental property, which is what these churches would become, at least in the short term.

In some cases, of course, there may be a substantial number of former parishioners willing to return to a building they have abandoned to the “Anglicans.” If so, the diocese may be able to convince Judge James that eviction of the “Anglicans” is neither unfair nor unreasonable.

Ultimately, the Episcopal diocese will have to deal with all parish property occupied by departing congregations, whether in buildings owned by the diocese or buildings merely dedicated to Episcopal Church mission by the Dennis Canon and other instruments. The diocese will, I suspect, make as few distinctions between these two groups as possible. Recall that the stipulation agreed to in the Calvary litigation distinguished diocesan property from parish property. Although there still may be quibbles about what is and is not diocesan properties, the court orders of October 2009 and January 2010 have settled the diocesan property issue—the property belongs to the Episcopal Church diocese.

Paragraph 2 of the stipulation requires that:

In the event a parish in the Diocese (hereinafter “Parish Church”) shall elect to disaffiliate with the Diocese, the Parish Church shall give written notice of that election to the Diocese by delivering a copy of the notice, signed by the Rector and the Vestry, to the Diocesan Bishop (hereinafter “Bishop”), to the Board of Trustees of the Diocese (hereinafter “Board of Trustees”), to each member of that Parish Church and to the Rector and Vestry of each other Parish Church of the Diocese.

There follows description of a procedure involving negotiation and, if necessary, mediation and litigation. In this paragraph, “Diocese” now refers to the Episcopal diocese. It is difficult to see how, given the Dennis Canon and the disciplinary canons of The Episcopal Church, the diocese can relinquish its claim to the property for anything less than fair market value. The Presiding Bishop, in fact, has made it clear that she does not want to see churches sold to breakaway “Anglican” parishes at all. This may not be a practical stance where so many church properties are involved. Sales or short-term leases may have to be granted. (The latter would make it easier for a congregation to return to the Episcopal fold later.) Unfortunately, the Paragraph 2 process may, in many cases, not lead to a quick agreement, and the court may again have to step in. One could argue, of course, that none of the breakaway congregations gave the necessary notice required by Paragraph 2 and that those parishes are therefore ineligible to participate in the negotiation process outlined in the stipulation.

Some Episcopalians have argued that we should be generous in giving away parish property because it is either old and expensive to maintain or new with an expensive mortgage and, in any case, of no use to anyone other than its current congregation. This, of course, is nonsense. It is impossible to generalize here, but some churches simply should have been closed and sold off years ago. Others could flourish with less intolerant leadership. In some cases, the real estate could bring in a large windfall if the land were subdivided for suburban housing or used for condominiums. The Episcopal diocese can put the money derived from such sales to better mission use elsewhere. The Pittsburgh diocese has, in the past, closed parishes in undesirable locations and used the money for new, better sited parishes. My own church benefited from such an action.

Cash and Investments

The most immediate effect of the court order will be to put various investments back under the control of the Episcopal diocese. This will improve the balance sheet of the diocese and will restore access to their investment funds by individual parishes. My own church normally receives more than $7,000 each year in earnings from a trust fund held by the diocese. It did not receive any money in 2009 because funds had been frozen by the court. At our annual meeting last Sunday, parishioners were told to expect two year’s worth of earnings from the fund in 2010.

In its press release about the recent court order, the Episcopal Diocese of Pittsburgh said that it “plans to quickly make arrangements so that all parishes may again have access to their investment funds that were frozen by financial institutions during the legal proceedings.” According to a story in today’s Post-Gazette, diocesan spokesman Rich Creehan, in response to a question from reporter Ann Rodgers, said that “any parish that had been participating in that fund from whatever time, we are making arrangements so they can access those funds.” If this is the intended policy of the diocese, I hope that it will be reconsidered. If someone has given you something of value to hold and has, at the same time, stolen some of your property, prudence (and, in this case, fiduciary obligation) might suggest that you should hold on to their property at least until your own belongings have been restored. How can the diocese argue that real estate must be returned because, as an Episcopal parish, assets were dedicated to the use of The Episcopal Church, whereas cash and investments were not? The intention to allow breakaway congregations access to their funds is a bad idea.

Of course, there is another reason not to allow breakaway congregations to withdraw funds. The position of The Episcopal Church is that parishes (i.e., institutions) cannot be removed from the church, but people, even whole congregations, can depart. The “Anglican” leadership of a departed congregation may legitimately lead that congregation, but it cannot be the legitimate leadership of the Episcopal parish, for which the funds were originally accepted.

Personnel

The Episcopal Diocese has been operating out of a small office with a very small staff. Plans have been in the works to expand both the staff and office space somewhat, but one has to ask if a staff of perhaps two full-time equivalent workers is adequate to deal with the ongoing needs of the diocese and, at the same time, responsibly incorporate newly restored assets and negotiate for others. Simply taking stock of the properties of Schedule C would keep a full-time person busy for a couple of months! Keeping tabs on tens of millions of dollars of assets probably requires more than a few minutes of thought every few days, which is probably all that it can be given now. The diocese needs quickly to assess its needs realistically and to hire appropriate people in temporary or permanent positions to do the work that needs to be done. It is very difficult to do mission successfully on the cheap. If the diocese has inadequate resources to determine and fight for what legitimately belongs to it, it may resort to giving away the store out of sheer inability to do anything else.

Be assured that Archbishop Duncan and his followers will fight for every farthing they can wrest from The Episcopal Church. As Canon Mary Hays was quoted as saying in the Post-Gazette story, “We have always wanted to find a way where both sides could have the resources appropriate to their share.” In other words, “If we can’t steal it outright, we’ll try to con you into dividing it equally.” It is not pastoral sensitivity to fall for this ploy. Doing so will only encourage theft in other diocese. Keep your eyes on Albany and South Carolina.

4 comments:

Thank you Lionel for another thoughtful, cogent analysis. I cannot imagine why any of the breakaway groups would be given access to any funds, while the diocese has the responsibility to insure, maintain and administer all of the properties at its expense. The Presiding Bishop is correct that no church building should be sold to a breakaway group, to reduce the incentives for malfeasance by groups in planning stages of departure. Duncan and his ill advised confidantes breached every conceivable express vow and implicit commitment to the Episcopal Church, schemed to commit theft on a grand scale and made astonishingly disingenuous arguments in the recent state court proceeding, and tried to justify it all with some utterly fictitious theological differences. Disaster is too kind a word to use for Duncan's stewardship. Duncan has obtained the archbishop's hat which he so desperately wanted, but now he needs to earn it, himself, by building his church with his own funding. Uncharitable? Speak to me of charity if and when Duncan and his crowd honestly reach the conclusion that they have grievously erred. Until then, any concessions would only validate the actions which Duncan has taken, and create bad precedent and incentives for other dioceses. Duncan should consider himself lucky that he is not being surcharged and held personally liable for all of the diocesan funds he used for his travels and other efforts to build his breakaway group. If the Episcopal Diocese of Pittsburgh gives a dime to the breakaway crowd, then it will have violated its fiduciary duties and will no longer be worthy of my trust.

The Post Gazette story today should have been titled "press release from the Anglican Diocese of Pittsburgh". The reporter states "The order, issued Friday, doesn't apply to parish property, which is to be negotiated later." Hmmm.... what exactly is the basis for this "negotiation"?

In the article there were statements from both Dioceses - from the Episcopal side the "Media Contact" expalined that arrangements were underway to let any parish (including the so called Anglican parishes) to have access to funds. From the Anglican side Ms. Hays was the spokesperson (perhaps Shawn Malarkey, the Communications Director was unavailable). She proceeded to nitpick the special masters report and, as Lionel points out, speak as if the Anglican Diocese was entitled to some share of the assets. Didn't she read what the Judge wrote?

Thanks, Lionel, for this clear report. With the spin that the Duncanite band is providing, I think it's important that folks in the affected parishes hear Bishop Price directly, as to what the ramifications of all this mean. Of course, knowing that truth brings light, the ACNA crew will do all in their power to block that.

In response to Geoff Hurd's rather rudely prefaced question:Yes, Shawn Malarkey has resigned and there is currently no one in the communications post at the Anglican diocese, though I am told someone will be hired shortly.Rich Creehan, who is always very accessible and helpful, told me that he couldn't elaborate beyond what was said in the statement from the Episcopal diocese, though he was kind enough to answer the question about whether parishes in the other diocese were included.